BACK • 
No Time To Be Gloomy
I want to spend a moment today speaking to the business community directly. Last year, as everyone knows, was rough. We apparently fell off some sort of an economic cliff in the fourth quarter, and the dreary corporate earnings along with corporate layoffs are likely to continue until some time in the third or fourth quarter of this year.
However, I think its fair to say that there is some sort of economic consensus developing in general that grudgingly says things will start picking up sometime in the second half of the year, and that 2002 should be a better year. At the beginning of this year, the Federal Reserve Board and its Chairman, Alan Greenspan, started to cut interest rates. So far, we’ve had 5 cuts to the tune of 2.5 points. In effect, the Fed was making everyone a promise. What they said was that they would do whatever it takes to avoid a recession. Since Fed actions often take 6 to 9 months to show up in the economy, it is fair to say that in the second half of this year the effects of lower interest rates will begin to reflect themselves in overall economic statistics.
We’ve been telling our clients all year long not to expect a recession, but to look for a sharp slowdown in the rate of growth from high, and perhaps unsustainable, levels achieved in late 1999 and early 2000. We are also reminding them of an old Wall Street adage, which says, "Don’t fight the Fed." It has proved for a long time to be good advice and it is most likely going to remain so.
In addition to having the Fed "on our side," the second half of the year will also feature the kicking in of the recently approved tax cuts-- that will be much needed additional third- and fourth-quarter stimulus for our economy. If we can just get Washington to leave the overall bill alone, various phases of it will continue to kick in over the next few years, adding additional stimulus and rewards for both savers and investors. There are also rewards for the business community, and specifically for the small business community. The previous occupant of the White House had never worked even a single day in private industry of any kind. Our new president, until just a few months ago, had been a small businessman in a number of ventures. To say that this administration will be a little more friendly to business in general is an understatement. This administration clearly knows what most of us in private industry know; that is, that small and independent businesses remain the backbone of our economy, creating something in the area of 90% of all the new jobs created in this country.
So, what’s my point? Specifically, economic statistics are likely to remain sour into the third and even fourth quarter of this year. Unemployment is expected to continue to rise, but these are all lagging economic indicators. As these "news" stories continue to be reported, please keep in mind that they are actually history lessons. That is to say, while we continue to crawl over recently released statistics and revisions on the first quarter Gross Domestic Product, we are, in fact, actually already coming to the end of the second quarter.
My suggestion to the business community is to take advantage of the loosening labor market. Previously in this space, we’d discussed the problem that the tight labor market had caused business. But now it is changing. Instead of sitting on your hands and being overwhelmed by the "gloom and doomers" who are likely to be wrong again, this would be a good time to be out there looking to upgrade your workforce with the more qualified people who are becoming available.
Looking forward, I think much of the rest of this decade is likely to be somewhere between good and terrific. This, then, is the time to be prepared for that brighter future, and make no mistake about it, I think you do that by hiring good people. The loosening labor market, in short, can represent a big opportunity for you and your business. But, to state the obvious, you have to take advantage of that opportunity. I think you do that by believing in yourself, in your business, and in the good people who work for you, and not the "gloom and doomers."
(Tom Butenhoff is a First Vice President with J. E. Liss and Company, Inc.
in Milwaukee. The views are his, and not necessarily those of Liss
Financial Services or the Job Connection/Hiring
Network.)